Riverbed Technology Inc. Assigned Preliminary 'B' Corporate Credit
Rating; Outlook Stable; Debt Ratings Assigned
Publication date: 12-Feb-2015 12:39:42 EST
-
Riverbed Technology
Inc., a U.S. provider of application performance
infrastructure and network management products, will be acquired by
Thoma
Bravo LLC and Teachers' Private Capital.
-
Riverbed plans to issue
$2.150 billion of debt to finance the
transaction, consisting of a $100 million first-lien revolving
credit
facility (undrawn at close), a $1.525 billion first-lien term loan,
and
$625 million senior unsecured notes.
-
We are assigning our
preliminary 'B' corporate credit rating to Riverbed.
-
We are also assigning
our preliminary 'B' issue-level rating and '3'
recovery rating to Riverbed's first-lien term loan and revolving
credit
facility, and a preliminary 'CCC+' issue-level rating and '6'
recovery
rating to the company's senior unsecured notes.
-
The stable outlook
reflects our expectation that the company will
maintain its leadership position in the wide area network (WAN)
optimization market and continue to generate positive free operating
cash
flow (FOCF) post-acquisition.
NEW YORK (Standard & Poor's)
Feb. 12, 2015--Standard & Poor's Ratings Services today assigned its
preliminary 'B' corporate credit rating to San Francisco-based
Riverbed Technology Inc. The outlook is stable.
At the same time, we assigned
our preliminary 'B' issue-level rating and '3' recovery rating to the
company's $1.525 billion first-lien term loan due 2022 and $100
million revolver due 2020. The '3' recovery rating indicates our
expectation for substantial (50%-70%) recovery in the event of payment
default. We also assigned our preliminary 'CCC+' issue-level rating
and '6' recovery rating to the company's $625 million senior unsecured
notes due 2023. The '6' recovery rating indicates our expectation for
negligible (0%-10%) recovery in the event of payment default.
"Our rating on Riverbed
reflects our view of the company's business risk profile as 'fair' and
financial risk profile as 'highly leveraged,'" said Standard & Poor's
credit analyst Kenneth Fleming.
We base our business risk
assessment on Riverbed's continued reliance on its flagship SteelHead
product, which faces limited growth prospects in a maturing end
market, for most of its EBITDA. The company's strong position in the
WAN optimization market, high contract renewal rates, diverse blue
chip customer base, and solid cash flow generation somewhat offset
these risk factors. The financial risk assessment incorporates
adjusted pro forma leverage of about 7x 2015 EBITDA.
In our view, Riverbed has
"adequate" liquidity. We anticipate coverage of uses in excess of 1.2x
for the next 12 months and positive net sources over the next 12-24
months, even if the company's EBITDA declines by 15%.
We based the stable outlook on
our expectation that the company will maintain its leadership position
in the WAN optimization market and continue to generate positive FOCF
post-acquisition.
We could lower the rating if
Riverbed fails to maintain its technology leadership and market share
in WAN optimization or if an inability to execute planned
post-leveraged-buyout cost-cuts precludes the company from reducing
leverage to a level approaching 7x over the next 12 months.
RELATED CRITERIA AND RESEARCH
Related Criteria
-
Methodology And Assumptions: Liquidity Descriptors For Global Corporate
Issuers, Dec. 16, 2014
-
Corporate Methodology, Nov. 19, 2013
-
Corporate Methodology: Ratios And Adjustments, Nov. 19, 2013
-
Key Credit Factors For The Technology Hardware And Semiconductors Industry
, Nov. 19, 2013
-
Management And Governance Credit Factors For Corporate Entities And
Insurers, Nov. 13, 2012
-
Criteria Guidelines For Recovery Ratings On Global Industrials Issuers'
Speculative-Grade Debt, Aug. 10, 2009
-
2008 Corporate Criteria: Rating Each Issue, April 15, 2008
Complete ratings information is available to
subscribers of RatingsDirect at
www.globalcreditportal.com and at
spcapitaliq.com. All ratings referenced herein can be found on
Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in
the left column.
No
content (including ratings, credit-related analyses and data,
model, software or other application or output therefrom) or any
part thereof (Content) may be modified, reverse engineered,
reproduced or distributed in any form by any means, or stored in
a database or retrieval system, without the prior written
permission of S&P. The Content shall not be used for any
unlawful or unauthorized purposes. S&P, its affiliates, and any
third-party providers, as well as their directors, officers,
shareholders, employees or agents (collectively S&P Parties) do
not guarantee the accuracy, completeness, timeliness or
availability of the Content. S&P Parties are not responsible for
any errors or omissions, regardless of the cause, for the
results obtained from the use of the Content, or for the
security or maintenance of any data input by the user. The
Content is provided on an “as is” basis. S&P PARTIES DISCLAIM
ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR
DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR
THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE
CONFIGURATION. In no event shall S&P Parties be liable to any
party for any direct, indirect, incidental, exemplary,
compensatory, punitive, special or consequential damages, costs,
expenses, legal fees, or losses (including, without limitation,
lost income or lost profits and opportunity costs) in connection
with any use of the Content even if advised of the possibility
of such damages.
Credit-related analyses, including ratings, and statements in
the Content are statements of opinion as of the date they are
expressed and not statements of fact or recommendations to
purchase, hold, or sell any securities or to make any investment
decisions. S&P assumes no obligation to update the Content
following publication in any form or format. The Content should
not be relied on and is not a substitute for the skill, judgment
and experience of the user, its management, employees, advisors
and/or clients when making investment and other business
decisions. S&P’s opinions and analyses do not address the
suitability of any security. S&P does not act as a fiduciary or
an investment advisor. While S&P has obtained information from
sources it believes to be reliable, S&P does not perform an
audit and undertakes no duty of due diligence or independent
verification of any information it receives.
S&P keeps certain activities of its business units separate from
each other in order to preserve the independence and objectivity
of their respective activities. As a result, certain business
units of S&P may have information that is not available to other
S&P business units. S&P has established policies and procedures
to maintain the confidentiality of certain non-public
information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain
credit-related analyses, normally from issuers or underwriters
of securities or from obligors. S&P reserves the right to
disseminate its opinions and analyses. S&P's public ratings and
analyses are made available on its Web sites,
www.standardandpoors.com (free of charge), and
www.ratingsdirect.com and
www.globalcreditportal.com (subscription), and may be
distributed through other means, including via S&P publications
and third-party redistributors. Additional information about our
ratings fees is available at
www.standardandpoors.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single
user-dedicated and may ONLY be used by the individual to whom
they have been assigned. No sharing of passwords/user IDs and no
simultaneous access via the same password/user ID is permitted.
To reprint, translate, or use the data or information other than
as provided herein, contact Client Services, 55 Water Street,
New York, NY 10041; (1) 212-438-7280 or by e-mail to:
research_request@standardandpoors.com. |
Copyright © 2015
Standard & Poor’s Financial Services LLC, a part of McGraw Hill
Financial. |